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Does it Make Sense to Launch 5G in India Right Now?

5G is coming soon with trials to begin in India shortly. But is it the right time to be launching a 5G network in India, or should we wait?

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Hemant Kashyap
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5G. The next generation of mobile connectivity. All the buzz is with the new network these days, with news articles being churned out on a whim. However, do we really need it right now?

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The Curious Case of 5G Use Cases

Use cases are basically how we can use a given technology - its applications, so to speak. 5G being the next generation of connectivity leaves nothing to the imagination with its performance. It is capable of delivering as much as 100 times the speed and latency as low as 1 ms. That means that there are as many use cases as you can think of. The few most exciting ones are:

  1. Internet of Things/Internet of Everything: 5G will make it possible in a practical sense. Right now, IoT is limited by the speed of the internet, which causes latency issues over long distances. With 5G, IoT can truly become an everyday thing. This leads us right into the specifics of this.
  2. Smart Factories and Automation: 5G will make factories smart in every sense of the word. Connecting production lines across the facility is only the start. Ericsson and China Unicom are developing the port of Qingdao as a 5G smart port. This will allow the port to save as much as 70% of labour costs. Incidentally, this port is one of the top 10 busiest ports in the world, and a successful implementation of automation would really be a testament.
  3. Industry 4.0: The aforementioned automation also comes under Industry 4.0, as much as it comes under IoT. With further automation across the board, expect to see more and more manufacturing plants to go automatic. This also covers medical sector - with 5G doctors can perform surgeries with higher precision and lower risks remotely.
  4. Mission Critical Communications: This covers power transmission, distribution, monitoring, diagnosis and resolution. The high speed and low latency provided by 5G will enable not just this, but also a lot of other mission-critical communications. This also covers traffic monitoring, self-driving cars and so on.
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There can be endless opportunities, as the new network will allow for niches not yet possible.

End User Telecom - The Most Critical of 5G Use Cases

India is a large country with a lot of people. These people need to stay connected with one another. Therefore, there are mobile networks in India. This much we all knew.

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The most critical use case of any telecom network is the day-to-day consumer usage. That means, for the rollout to be a commercially viable exercise, India needs enough 5G smartphones in the ecosystem.

Moving on, according to many estimates, there will be as many as 38 million such smartphones in the country by the end of 2021. India's current smartphone market exceeds 150 million units, so this figure will translate to around a fifth of  the market share. A fifth of India's smartphone owners will have a 5G-ready smartphone. That sure makes it a commercially viable option for the Big Three of the telecom industry.

However, most of these smartphones don't support many 5G bands, and the telco will have to keep the same in mind.

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In other news, the government of India recently gave the green light to 5G Trials in the country. They went as far as to allocate experimental spectrum to the telcos to run their trials. By all estimates, it should take at least 6 months to finish the trials. That means, most of the telcos will be done by late November to early December 2021.

For now, the best places telcos to first launch a 5G network are Reliance Jio and Vodafone Idea. They own spectrum in a critical sub-1 GHz - the 800 MHz band.

Even if India will most likely roll out only a NSA network for the time being - I will go out on a limb and say that Reliance Jio will launch their 5G on January 1. The others I can't be sure of, but that is a very Jio thing to do and I'm counting on them.

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India's Digital Divide

There are about a billion wireless users in India. Out of 1.15 billion wireless users:

  • Only around 66% users, that is, 769 million users, are subscribed to data services.
  • Out of these data users, 97% of the total data was consumed by 4G users.
  • Around 300 million users depend on 2G.
  • 2G users amount to only 0.59% in total data used.
  • 3G contributes to around 2.34% of total data used.
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What we can take away is, that about 380 million users do not have access to the internet. Moreover, there is the case of 300 million people on 2G. There is obviously an overlap here, but regardless, a population bigger than 90% of the countries does not have access to the internet.

Initiatives from telcos such as Reliance Jio's 2G Mukt Bharat, where the telco is partnering with Google are commendable. However, these initiatives remain few and far between, even though the telcos stand to reap the most reward with increased users.

Furthermore, the key industries which are set to benefit from the new network are still lagging behind in India. Digitization is still a dream for hundreds and thousands of MSMEs in the country. India is an economy with an inherently analog backbone - replacing it will digital will take time.

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Financials Associated with 5G

ARPU, or Average Revenue Per User, is one of the most important variables for a telco. It stands to determine how financially sound a telco's operations are. Currently, Bharti Airtel has an ARPU of Rs. 151. The Sunil Mittal-led telco is followed by Reliance Jio with an ARPU of Rs. 145. Completing the podium is Vodafone Idea, with their ARPU of Rs. 121. And when we say that Vodafone Idea is struggling financially, its ARPU is a clear indicator as to why.

Here are some of the plans available in the US:

  1. Verizon has 5G plans starting from $40 (Rs 3000) per month for a capped plan and $80 (Rs. 6000) for an unlimited 5G plan.
  2. AT&T offers 5G plans starting at $75 (Rs 5500), which can come as low as $60 (Rs 4400) with auto-pay.
  3. T-Mobile's plans start at $65 (Rs 4800). However, they offer slower 5G than the rest.

Of course, with all due respect, US is most definitely not a benchmark for 5G plans. However, with greater speeds comes greater price. Telcos in India are keeping that at the top of their agenda, and that needs to be acknowledged.

This price point depends on a lot of factors. The most important ones being spectrum pricing, infra costs, advertising and marketing costs, manufacturing and other related costs and so on. If I were to guess, I'd say the prices will start around Rs. 600-800 per month, for capped packs.

However, this immediately places 5G out of the reach of a significant portion of 4G users. This narrows the customer base down by another significant portion.

So, 5G or No 5G?

For now, all we can do is wait and see what happens with the 5G Trials. How they proceed, the potential challenges, risks and other factors and so on. There are a lot of variables but to be honest, 5G will become India's messiah, truly guiding the country towards total digitization.

5G is our chance at the $1 Trillion digital economy. I'd like it to be rolled out tomorrow, but we must wait at least till the start of 2022 for our first commercial 5G networks. From there, the possibilities are limitless.

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